Sanger v. Flow

• Decision Date: 01 January 1891
• Citation: 48 F. 152
• Parties: SANGER et al. v. FLOW et al.
• Court: U.S. Court of Appeals — Eighth Circuit

48 F. 152

SANGER et al. v. FLOW et al.

United States Court of Appeals, Eighth Circuit.

October Term, 1891

W. O Davis, for plaintiffs in error.

W. B Johnson, A. C. Cruce, and C. E. Mitchell, for defendants in error.

Before CALDWELL, NELSON, and HALLETT, JJ.

CALDWELL J.

On the 24th of November, 1890, the plaintiffs in error brought suit in the court below against Flow & Foster upon account for $2,171.67. On the same day the plaintiffs filed an affidavit for an attachment against the defendants, upon the ground that they had disposed of their property with the intent to defraud their creditors. An order of attachment was issued on the 24th of November, and on the same day levied on a stock of general merchandise, store fixtures, safe and contents books, and notes, which had been the property of the defendants. Upon the application of the plaintiffs the court made an order directing a sale of all the property attached as perishable property, and on the 5th of January, 1891, it was sold by the marshal. On the day the plaintiff sued out the attachment, but some hours before the order of attachment was issued or levied, the defendants executed a deed of assignment to the interpleader, Anderson, conveying to him in trust for their creditors, the identical property afterwards seized by the marshal on the order of attachment against the defendants. The deed of assignment was duly acknowledged and delivered to the assignee, and filed for record before the order of attachment reached the hands of the marshal. The assignee appeared, and filed an interplea, claiming the attached property under the deed of assignment, and the defendants filed an affidavit denying the grounds of the attachment. The plaintiffs filed an answer to the interplea, denying the execution of the deed of assignment, and alleging that it was void on its face, fraudulent in fact, and executed after the issue and levy of the writ of attachment. The issues on the interplea and on the attachment were submitted to the same jury who found the issues on the interplea in favor of the interpleader, and the issue on the attachment in favor of the defendants. Judgment was rendered in favor of the interpleader for the proceeds of the sale of the attached property, and in favor of the defendants quashing the attachment. The specifications of errors filed below and relied upon in counsel's brief will be considered.

The act of congress approved May 2, 1890, (26 U.S.St.c. 182, Sec. 31,) adopted and put in force in the Indiana Territory the body of the statutes of the state of Arkansas, as contained in Mansfield's Digest of the laws of that state. Among the statutes thus put in force was chapter 8 of that Digest relating to assignments for the benefit of creditors. Section 305 of the Digest provides that before the assignee shall be entitled to take possession, sell, or in any way manage or control the assigned property he shall file in the office of the clerk exercising chancery jurisdiction a full and complete inventory of the property, and a bond in double its estimated value. The deed of assignment contains this clause: 'The said L. P. Anderson not to take possession of said property until he shall have filed a good and sufficient bond, as in such cases made and provided. ' The deed makes no reference to an inventory, and the contention is that the clause prohibiting the assignee from taking possession until he gives bond is tantamount to providing that he shall take possession before making and filing the requisite inventory. It is the settled construction of this act by the supreme court of Arkansas that a deed of assignment, which in terms or by necessary implication provides that the assignee shall take possession of the assigned property before he makes and files the required inventory and bond, is repugnant to the statute, and void. But it is not essential to the validity of a deed of assignment that it should require the assignee to make and file the inventory and bond. The law imposes that duty on the assignee. The clause in the deed requiring the assignee to give bond before taking possession of the property is, therefore, surplusage. A useless provision, relating to giving the bond, which is in harmony with the statute, cannot be construed as authorizing or directing the assignee to take possession before he makes an inventory, in violation of the statute.

The deed of assignment prefers certain named creditors, and provides that, after paying the expenses of the trust and the preferred creditors, the balance of the trust fund shall be paid 'to all our remaining creditors pro rata, according to their indebtedness. ' The names and amounts due the unpreferred creditors are not given in the deed or in any schedule attached thereto. It is claimed that the failure to attach such a schedule avoids the deed. The law is otherwise. Burrill, Assignm. pp. 186, 205. Such a schedule, if filed, would not be conclusive as to who were creditors, or the amount of their debts. If any surplus remains to be distributed to such creditors, and there is any doubt as to who they are, or the amount of their debts, the assignee should refer the matter to the court of chancery administering the trust, and that court will, by some appropriate proceeding, determine these questions, and order the fund distributed accordingly. If the assignee fails to act, any creditor may compel him to do so. Nor does the failure to fix a limit of time for the assignee to apply the proceeds of the assigned property affect the validity of the deed of assignment. Burrill, Assignm. p. 323. If the assignee does not pay over the trust fund to the creditors as quickly as he should, the court under whose supervision he is administering the trust, or any court of chancery having jurisdiction, will compel him to do so on the application of any creditor.

Several assignments of error rest on the proposition that the failure of the assignee to make and file the required inventory and bond before the property was attached by the plaintiffs avoids the deed as against such attachment. In adopting the Arkansas statutes for the Indian country it will be presumed that they were adopted with the construction and interpretation placed upon them by the supreme court of that state prior to their adoption by congress. It has long been settled by the decisions of the supreme court of Arkansas construing the statute under consideration that the execution and delivery of the deed of assignment to the assignee passes the title to the assigned property; that the failure of the assignee to make and file the inventory and give the bond does not affect the validity of the deed, or the assignee's title to the property thereunder, but that the assignee is not 'entitled to take possession, sell, or in any way manage or control: the assigned property until he makes and files the inventory and gives the...